Walk down the aisles of any Whole Foods or Target, and you’re bound to see product labels touting ingredients sourced from sustainable suppliers or eco-conscious packaging. For consumer products like these, there are clear ways to make sustainable claims about eco-conscious materials, processes, or attributes. (Keep in mind, though, there are, of course, some bad actors guilty of corporate greenwashing.)
But what about businesses that sell services? Can an accounting firm provide sustainable tax prep? Does a marketing agency provide sustainable copywriting? The connection between services and sustainability isn’t as clear.
But just because service-based businesses don’t have the same type of supply chains or green designations as product-based brands, it doesn’t mean they should forget about their carbon accounting or that of their vendors. From the marketing software platforms they use to the coffee suppliers that caffeinate their offices, professional services companies should still hold vendors accountable to environmental standards. Doing so is critical to measuring environmental impact, particularly scope 3 emissions.
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Even if a professional services company thinks it has a minimal carbon footprint, its actions can influence the behaviors of other stakeholders and create a business environment conducive to long-term growth.
“If both client firms and their vendors are actively committed to environmental sustainability, in addition to creating value for environmentally oriented stakeholders, this shared commitment will in part contribute to these firms being viewed by people as great places to work, setting a foundation for building great workforces and being great places to buy for customers and invest for shareholders,” says Mark Sickles, CEO of SuperOrg, a management consulting firm.
Determining vendor footprint
Before engaging professional service providers about their sustainability and ESG initiatives, the companies first need to understand their own environmental footprint.
The goal? Identify supply chain risks, and align corporate values with your suppliers and value chain.
But with services vendors or digital products, that can get tricky. In these cases, you should engage vendors about social (e.g., human rights) and environmental topics. For example, how they treat their workers, what ethical or environmental stewardship policies they have in place, if they measure their carbon impact, and if they can tell you how much it impacts the goods or services they provide your business.
Let’s take this hypothetical example: If you’re trying to analyze the sustainability of an HR software provider, you might want to understand what their data center energy use looks. You might also ask about carbon emissions from sources like business travel and office waste.
While this might seem daunting, a resource like Sustain. Life’s supplier management tools can help you automatically survey and score suppliers and even help them improve their sustainability programs.
Non-siloed supplier sustainability
What do you do if suppliers don’t meet your standards?
You could switch to more sustainable vendors, which often requires a shift in your procurement process and management strategy. That shift will require getting more departments on board. For example, a law firm that wants to switch to a more sustainable website host might need to work with their sustainability and IT departments to dictate performance requirements.
“Practice being a boundaryless organization—require vendors to embrace their active commitment to environmental sustainability,” advises Sickles. He promotes a shift from an intradisciplinary to an interdisciplinary approach to governance, leadership and management.
In other words, businesses should take an integrated approach instead of making siloed decisions. This sentiment was echoed by Sustain. Life’s CEO, Annalee Bloomfield, in a Forbes article. “To run a more sustainable company and live the mission, your sustainability strategy has to permeate everything and every job function—from office managers and data providers to those all the way up at the top in the C-suite.”
Continuously improving vendor sustainability
If sourcing new vendors is impractical, businesses should engage existing suppliers. Whether you already work with a sustainable supplier and want to improve emissions management further, or the functionality an existing vendor provides is too economically valuable to pass up, investing in existing partners can be a win-win.
In some cases, discussions can be relatively easy. A property management company might ask its landscaping company to switch to environmentally-friendly fertilizers and use drought-tolerant plants. They might be willing to make changes if the contract is large enough—or if the supplier sees an opportunity to create a new offering.
In other cases, a service-based business might have less leverage alone. But collectively, companies can drive change. For example, Habitus Incorporated, a communications and transformation firm, banded together with product-based businesses like Patagonia as part of the B Corp Climate Collective, which encourages companies to reach net-zero by 2030.
Communicating your policies, supplier code of conduct, and expectations shows stakeholders you’re serious about maintaining strict sustainability performance standards.
Communicating the impact of supply chain and vendor sustainability
Once you’ve engaged with your suppliers, you can leverage that effort into marketing materials.
At first glance, this might not be as obvious as with product-based companies, which can share that information on labels and packaging. But businesses that sell services still have plenty of options to communicate with customers, employees, investors, and other stakeholders about the vendors they work with.
For example, payment processor Stripe offers companies the ability to direct a portion of revenue from transactions toward carbon removal. Businesses that go this route can add this to their Stripe invoices. So, a service-based business like a PR agency can show clients that they’re selecting vendors that understand and take steps to offset their climate impact.
In other cases, business leaders might need to proactively communicate their choices. For example, if you choose a software vendor like Hubspot because it’s carbon neutral, keep employees informed about what influenced your decision. That might make the migration from another tool more palatable and help employees feel like they’re working at a company that shares their values.
From engaging employees to creating stronger supplier relationships and building customer loyalty, sustainable service-based businesses stand out from competitors. So, whether you produce a physical product or not, nothing should stand in the way of creating a set of standards and expectations for your vendors. Doing so goes a long way toward building a better business.